What CEOs Should Know About Wars In Iran And Over AI |
I’ve been an SNL fan since high school, and Saturday’s cold open truly resonated with me. James Austin Jackson was playing President Donald Trump standing behind a podium and trying to explain the justification for the U.S. military operation that launched in Iran in the early hours of Saturday morning.
Jackson’s Trump said that people had been asking about the timing of the strikes. He joked that there were two reasons: the stock market had closed for the weekend, and to cause chaos in the SNL writers’ room.
“They probably had a big State of the Union address thing they were gonna do. Not anymore!” Jackson said. “...Put the whole thing in the trash and start fresh!”
TV writers aren’t the only ones who have spent the weekend refocusing on what seems to be a nonstop news cycle, in which market-moving headlines can pop up and replace each other by the hour. So if you were hoping to read in this newsletter about what last week’s State of the Union might mean for businesses today, for instance, you’ll want to look elsewhere. I’m always striving to offer the most consequential news of the week for business leaders, and these days it can be a challenge. But success is about adaptation, and given the last several years, adapting is a skill we all have had to master.
SaaS platforms have always had to adapt to technology and the needs of different enterprises. Atlassian has been a top provider of collaboration platforms for more than two decades, and cofounder and CEO Mike Cannon-Brookes told me in an interview late last year about the ways they’ve been using AI to their advantage. An excerpt from our conversation is later in this newsletter.
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The U.S. partnered with Israel and in the early hours of Saturday, began an extensive military campaign in Iran. U.S. and Israeli bombs hit targets in several cities across the country, killing hundreds—including Iran’s Supreme Leader Ayatollah Ali Khamenei. Throughout the weekend, the war spread, with at least four Americans killed and reports of counterstrikes in Israel and consular locations in countries including Qatar, the United Arab Emirates, Saudi Arabia and Kuwait. The attacks have heightened instability in the Middle East, as the UAE, Bahrain, Oman and Kuwait reported deaths in the hostilities.
Wall Street opened a bit down on Monday, though the major indexes rebounded and were relatively flat by midday Monday. Oil futures spiked, as Brent Crude spiked to nearly $79 a barrel on Monday morning, reaching its highest level in 12 months. Analysts predicted oil prices to continue escalating as the week continues, especially considering Iran’s influence over the Strait of Hormuz, a major oil shipping lane. (Forbes senior contributor Gaurav Sharma writes it is unlikely this conflict will shut the strait down completely because of military and economic reasons.)
Also trading higher on Monday: Gold—up 2.4% since markets closed on Friday.
ARTIFICIAL INTELLIGENCE
This weekend saw the explosive expansion of two wars. One was the U.S. and Israel beginning armed conflict with several air strikes against Iran. The other was between the federal government, Anthropic and OpenAI. And in the war over AI, at the moment, it’s unclear who is the victor.
The Pentagon reportedly wanted to have unrestricted access to Anthropic’s AI tools for military functions. Anthropic demurred, saying it didn’t want its models to be used for mass domestic surveillance or fully autonomous weapons. Nearly 800 people—many of whom are Google and OpenAI employees—signed a letter last week supporting Anthropic’s red lines, and urging other companies to limit how their technology can be used for military purposes.
The deadline for Anthropic and the Defense Department to finalize their negotiated agreement was 5:01 p.m. Friday. In the absence of an agreement, the government could either cancel its $200 million contract with Anthropic, or demand Anthropic’s technology against their will. An agreement between Anthropic and the federal government was not reached, and Defense Secretary Pete Hegseth said he will deem Anthropic a supply chain risk to national security. This means that anyone doing business with the U.S. military will not be able to use Anthropic’s technology.
Hours later, the New York Times reported, OpenAI reached an agreement with the Pentagon to provide AI for military classified systems. OpenAI CEO Sam Altman said in a social media post that they had been able to get prohibitions on domestic mass surveillance and autonomous weapons systems in their agreement. A deeper dive into why the agreement with Anthropic fell apart by the New York Times found it was essentially a question of personal negotiating styles—and OpenAI’s entrance into talks.
Anthropic’s hard-line stance against the Trump Administration boosted its popularity among users, with the Claude chatbot overtaking OpenAI’s ChatGPT as the most popular app on Apple over the weekend. Monday morning, however, Claude was down—potentially because of user load.
Forbes senior contributor Michael Posner writes that the issue with the AI contract is veering into a dangerous place for any U.S. business. If businesses disagree with any aspect of the Trump Administration’s plans, its action toward Anthropic shows the federal government can not only cancel its contracts with their companies, but threaten them with further sanctions—like deeming them a national security risk.
Netflix’s big $83 billion deal to acquire Warner Bros. is apparently no more. Rival Paramount Skydance, which mounted a hostile bid as soon as the planned sale of the storied entertainment company to Netflix was announced and never stopped jockeying for the firm, seems to have won.
After Warner Bros. Discovery said the new Paramount Skydance bid was superior, Netflix had four days to respond with a new bid of its own. The streaming giant responded by stepping away, saying “the deal is no longer financially attractive.”
Investors in both Paramount and Netflix rewarded the companies on Friday, after news of the deal hit the markets. By the end of Friday, Paramount stock had risen as much as nearly 27%—though it was down about 7.5% on Monday—while Netflix was up more than 13%. Paramount’s investors are excited about the deal, while Netflix investors are glad the company will be able to focus on its core business. Forbes senior contributor David Bloom writes that the advancement of AI technology will give entertainment companies more to fight for, and without the Warner Bros. deal, Netflix has the resources to do so—plus pursue lucrative deals for streaming major events and professional sports.
It still isn’t an actual done deal yet, though. Warner Bros. Discovery’s board approved the Netflix sale, and that stays in effect until board members have a chance to vote on the Paramount Skydance bid. There’s also regulatory issues that would need to be addressed—though last month Paramount Skydance received the first piece, as the Justice Department said there is no statutory impediment to the deal. However, antitrust lawyers told Forbes, this doesn’t constitute Justice Department approval for the deal. (However, considering Paramount Skydance is run by David Ellison, son of Oracle CTO and Trump ally billionaire Larry Ellison, it may be relatively easy to get.)
There’s also the matter of money. Paramount just merged with Skydance in August in an $8 billion deal, so the company doesn’t have much cash on hand. Forbes’ Phoebe Liu writes that a combination of debt and Larry Ellison’s Oracle stock is likely to provide much of the financing.
Why Atlassian’s CEO Is Optimistic About AI
Atlassian has offered a suite of collaboration platforms used by companies worldwide since the company was founded in 2002. Though the company’s stock has taken a beating in the recent SaaS-pocalypse market reckoning, its most recent quarterly revenue was $1.6 billion—up 23% year-over-year—with cloud revenue surpassing $1 billion.
I talked to cofounder and CEO Mike Cannon-Brookes about his vision for Atlassian and AI late last year, as Atlassian commemorated 10 years of being a publicly traded company. This interview has been edited for length, clarity and continuity.
Tell me about Atlassian’s strategy to bring AI to make collaboration better.
Cannon-Brookes: We always try to focus on decade-long transformations of the business. Right now, they’re the system of work, the enterprise and AI, and AI is clearly our No. 1 priority.
Our business is about collaboration. We plow workflows, business processes and everything for hundreds of thousands of companies, and millions of people every day. In those workflows, generally we solve human problems about how you get a group of people together, call the team and try to get them to do something.
The exchange between those groups is text, fundamentally. It could be in many different forms. It can be a whiteboard, it can be a document, it could be a piece of code, it could be just commentary or a set of fields. The ability for us to use AI to connect that text with other texts that exist elsewhere in their world, to create their organizational memory, as we’re doing with Teamwork Graph [Atlassian’s unified metadata network] , and then use wonderful AI technologies to give them fundamentally better outcomes is totally different than what it was before.
It’s changing the way we can do what we’ve always done for customers. Their problems haven’t changed, but the technology solutions we have really have. AI is a huge net positive. When we talk about a group of humans getting together as a team, it’s about their creativity, problem solving, knowledge and everything else. I think we’ll be far better off. We’ll have far better quality outcomes. And I really think that’ll just lead us all to have better products and services. And so we're pretty optimistic on what it can do for our core mission.
A lot of people fear that AI is going to take jobs away, but you’ve said the opposite about Atlassian. Tell me where you see the workforce going and why—at least for your company—AI is not something that’s going to reduce it.
We’re internally taking the view that we’re going to do more. You’re going to have companies that grow and companies that shrink, but as an industry as a whole, it has created more jobs.
AI is an instrument to be played, to create whatever you need to create. It’s not a replacement tool for the human. It’s augmentative. It’s about collaborating with AI: How do I use AI to get what I’m trying to do, but done faster or with a better quality output?
We have a lot of statistics from customers. [About] a third of our business is in software development and technology teams—developers, designers, product managers, analysts. The customers we have that use AI coding tools aggressively, they actually expand about 5% faster than our average customer, and they have 20% to 25% more projects as a whole. They’re able to get more throughput for sure. But the output is a higher quality, which probably means that company is more successful, which probably means they hire more people to keep doing more things.
I think it’s very easy in a spreadsheet to look at: Here are the jobs we’re going to lose. It’s very hard in that spreadsheet to say: Here are the jobs we’re going to gain. It’s very concrete, the ones we’re losing; and very ephemeral, the ones we’re gaining.
When the computer came along, we lost a bunch of bookkeepers and we gained a billion people to use Excel every day. I think the nature of work will change, no doubt. Fundamentally, I’m an optimist. It’s an accelerant to your company’s mission. It’s not a replacement kind of technology.
If we were to talk again in five years, what would we be talking about?
I think we’ll continue to grow. We’ll continue to have the same great set of values, same mission.
We’re not talking about AI anywhere near as much, because AI has become a part of technology. The human brain is just amazing at its ability to absorb a technology, put it to use, turn it into a tool. We’re tool builders and tool users. Give ‘em a hammer, they’ll figure it out. Give ‘em a smartphone, they’ll figure out how to use it.
I suspect in five years time, we’ve probably been through some sort of crash where people [say AI] didn’t deliver the value that we all said it did, and then it actually is delivering that value. But it takes a while to figure it out.
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Which company announced last week that it would cut 40% of its workforce because of anticipated efficiency from AI?
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